Builders Vans and VAT

[glojo]

Help required,

My brother-in-law is thinking of buying a new van for his business. The vehicle he is looking at has a row of seats behind the driver, plus windows for these passengers to look out of.

The salesperson stated my brother-in-law could claim back the VAT, but when he checked with his accountant, the accountant said that was wrong advice?

I wrote to the Customs and Excise seeking their advice, but they wanted my VAT registration number and business details. I am only asking a question and do not have a business, plus I do not want to use my brother-in-laws details.

Is there anyone out there that has experience, or knowledge of this situation. Is the car salesperson correct, or the accountant?

My faith and experience of car sales people is that they do not know there own subject very well, and VAT is a specialist subject although this issue must crop up quite frequently.

Thanks in advance,
John

 

[JohnC]

John

Without seeing the van I would say your accountant is correct - see Customs & Excise Public Notice 700/64 Chapter 2

The seats and windows turn it into a car and the VAT is blocked (unless your binlaw can prove the van is only used for business)


http://www.hmce.gov.uk/channelsPort...ertyType=document&columns=1&id=HMCE_CL_000090

 

[glojo]

John

Without seeing the van I would say your accountant is correct - see Customs & Excise Public Notice 700/64 Chapter 2

The seats and windows turn it into a car and the VAT is blocked (unless your binlaw can prove the van is only used for business)

Hi John
Thank you very much indeed for taking the time to reply, and I should imagine he would allow the driver to take the vehicle home, so that would rule out the 'only business issue'

Thanks again,
John

 

[GRAV888]

Also, with side windows, he could get through the Dartford tunnel for a quid instead of £1-80

 

[PJH]

Also, with side windows, he could get through the Dartford tunnel for a quid instead of £1-80

A bit of a strange ruling that one. I once new someone who had a small 4x4 pick-up, maybe Suzuki, it had a folding soft-top. She went through the Dartford Tunnel and bloke in kiosk tried to charge her the VAN rate because the soft-top did not have side windows in it. She pointed out that it had a second row of seats but bloke in kiosk wouldn't believe it was a car.
She even folded the roof down arguing that vans are NOT convertables.
He still wouldn't let her through.
Jobsworth Gold Medal.

 

[glojo]

Also, with side windows, he could get through the Dartford tunnel for a quid instead of £1-80

Hi Grav,
Living in Lincolnshire, I'm sure he will appreciate that vital piece of information.

Take care,
John

 

[GRAV888]

Hi Grav,
Living in Lincolnshire, I'm sure he will appreciate that vital piece of information.

Take care,
John

You never know when he might come down this way.
I live down here, but still go across the Severn bridge (God only knows why) and sometimes even the Humber bridge. (Now their prices do take the pee)

 

[Kinky]

Hummmm - I thought that they were a good tax option - as you could claim it back - hence the rise double-cab 4x4 pick-ups .... like the Mitsi LS200 or whatever it is - which is being advertised to death.

Note: I'm not an accountant or car dealer - but of the 2 of them ........ I'd believe the accountant first. But as you are doing - I would check it first.

K

 

[Webby]

You never know when he might come down this way.
I live down here, but still go across the Severn bridge (God only knows why) and sometimes even the Humber bridge. (Now their prices do take the pee)

I know why you go across the Severn bridge.
To come to lovely Wales
We charge you to come in but let you go back for free.

 

[guydewdney]

1) its impossible to 'claim back' vat on a van...

2) if its for disabled use its vat exempt.. (adapted for disabled use includes just having a steering wheel knobble thingy) - but it must be adapted PRIOR to sale... see c&e website for more details

3) theres some ruling about having 50% of the van as load carrying - WillG (splitter) knows a bit about this - but this isnt a vat thing, its a company car vs goods vehicle question

 

[glojo]

its impossible to 'claim back' vat on a van...

theres some ruling about having 50% of the van as load carrying - WillG (splitter) knows a bit about this - but this isnt a vat thing, its a company car vs goods vehicle question

Hi Guy,
Thanks very much for that information. It certainly makes sense and it looks like he will have to get chapter and verse from the salesperson.

Regards,
John

 

[Tan]

It could be worth asking the salesperson to put it in writing that he can claim back the VAT and if he cant that they will reimburse him the equivilant amount.

At least that way you ensure that either the sales person gets 100% confirmation or your bro inlaw gets the money back anyway.

 

[glojo]

It could be worth asking the salesperson to put it in writing that he can claim back the VAT and if he cant that they will reimburse him the equivilant amount.

At least that way you ensure that either the sales person gets 100% confirmation or your bro inlaw gets the money back anyway.

Hi Tan,
I think the World of my brother-in-law and in theory your advice is okee dokee, but anything that might involve solicitors is a very BIG no, no.

Take care,
John

 

[mark.t]

tax is taxing

something like this at work one of the lads got a Toyota double cab and hard top but because the double doors open the same as a car with seats + windows in the back he would be charged as a company car even though it has our logo all over it ....yet another lad got a ford ranger where the doors are like the Mazda rx they fold in on each other has rear seat + windows is not subject to company car rule like the other one ....strange world we live in....the Toyota was given back it brand new all chrome armadillo hard top A/C tow bar ....and nobody wants it ....just sat in our garage wonder if we put a rocket launcher on it we could sell to Iraq

 

[glojo]

The frustrating thing is that this vehicle is a 'bog' standard van with just a working row of seats behind the driver and windows for them to see out of. No 'posh' car type seats. No 'posh' type inerior lining.

I would describe the vehicle as 'Transit' size, but it is a Vauxhall Vivaro?

http://vauxhall.co.uk/showroom/sear...nd=Vivaro&trimLevel=Doublecab&vehicleType=Van

Thanks for all the interesting messages, and hopefully no offence was taken over my attempted humour regarding the Dartford tunnel?

John

 

[Ratten]

If the vehicle has a payload of greater than one tonne, the vehicle is classified as a Van and not as a car, regardless of whether there are rear seats and windows. However, HMCE may reduce the Payload rating of this vehicle based on the theoretical capacity of the extra seating.

I suggest contacting your local HMCE office for advise and if you get a positive response, request confirmation in writing.

 

[GRAV888]

Thanks for all the interesting messages, and hopefully no offence was taken over my attempted humour regarding the Dartford tunnel?

John

Hi John.
No offence here mate.
As you know, I have the artic lorries and Dart Tunnel is £2-80 for them.
I don't see how the Humber bridge can charge £16-70 each way and the Severn Bridge £14-30?????????? (albeit 1 way)

 

[glojo]

Hi John.
No offence here mate.
As you know, I have the artic lorries and Dart Tunnel is £2-80 for them.
I don't see how the Humber bridge can charge £16-70 each way and the Severn Bridge £14-30?????????? (albeit 1 way)

Strueth!!!!! You should tell them you only want to use the bridge, not buy it!

Take care,
John

 

[JohnC]

2. Cars are treated quite differently for VAT purposes from commercial vehicles. In brief:

· most ordinary business cars are subject to a block on input tax recovery, which is a proxy for taxing the private use of the car;


· the private use of commercial vehicles is taxed; either by means of an input tax apportionment or a periodic output charge on actual private use;


· a business that converts a commercial vehicle into a car becomes liable to an output tax charge on a ‘self-supply’ of the vehicle to itself.


3. With effect from 1 December 1999 vehicles are no longer treated as cars for VAT purposes if they have a payload of one tonne or more. Payload is the difference between a vehicle's maximum gross weight and its kerbside weight. In practice the change mainly affects those vehicles generally described as double cab pick-ups.

4. Given the different treatment of cars and commercial vehicles (paragraph 2) it is important for manufacturers, distributors, dealers and business customers to know the payload of any double cab vehicle they sell or buy. It is especially important to be aware that by adding accessories to the ex-works model they may – by lowering the payload of the vehicle – convert it into a car and make themselves liable to the self-supply charge. Such conversions are most likely to occur with double cabs that have an ex-works payload of 1000 -1050 Kg.

5. In order to provide simplicity and certainty, Customs and the SMMT have agreed the following arrangements.

Ex-works payloads

6. SMMT members will take steps to make dealers aware of the ex-works payloads of their double cab models. Customs Unit of Expertise for the Motor Trade will maintain a schedule of double cab pick-up vehicles with ex-works payloads to be agreed with the SMMT. Manufacturers will provide the Unit of Expertise with details of new models to be added to the Schedule, and of discontinued models to be deleted.

Accessories fitted by dealers or customers

7. Customs will, with one exception, ignore as de minimis the addition of accessories to the ex-works model of any vehicle included on the schedule. The exception is the addition of a hard top consisting of metal, fibre glass or similar material, with or without windows. In practice this means that a manufacturer, dealer or customer can fit any accessory to the vehicle, other than a hard top, and still rely upon its payload as being the ex-works payload shown in the schedule.

8. Further, Customs will accord all hard tops a generic weight of 45 Kg. So, for example, the addition of a hard top to a double cab with an ex-works payload of 1010 kg will convert the vehicle into a car (payload reduced to 965 kg). The addition of a hard top to a double cab with a payload of 1050 kg, would not convert the vehicle into a car (payload reduced to 1005 kg).

Reviews

9. This agreement will be reviewed in the event of a significant change of circumstances; eg a change of VAT law or significant changes in the market.

 

[glojo]

2. Cars are treated quite differently for VAT purposes from commercial vehicles. In brief:

Hi John,
Thank you very, very much for the time and effort, I really appreciate what you have done.

Regards,
John